One Man’s Signal Is Another Man’s Noise

After the weekend kerfuffle over AngelList I was reading Brad Feld’s post on Signal vs. Noise. It’s apropos because there is so much noise these days with e-mail, Twitter, Facebook, blogs, Web shows, etc. that it’s sometimes hard to know when to pay attention and when to keep your head down.

Mostly during the day I’m in meetings or doing work. I’m sitting at my computer now at 9: 00 p.m. writing this – which is an hour earlier than I normally write (there are about eight women at my kitchen table having a book club (aka excuse to drink wine and gossip so I’m locked in another room writing).

I don’t get too bogged down in the noise during the day. If I check Twitter it’s usually because I’m waiting for a meeting to start and I never write posts during the day. My secret noise pleasure is to scan TechMeme throughout the day. I enjoy that.

But aside from choosing the time of day to focus on signal vs. noise, Brad’s post got me thinking about another question – what is signal and what is noise? I agree with Brad that we each need to reduce noise in our daily lives. I think we have slightly different filters of signal and noise. Probably we all have different filters.

I was thinking back to a few previous “insider baseball” blog debates that raged for several weeks: AngelGate (aka Bin38 secret cabal), convertible debt vs. equity, bubble vs. not, and now the AngelList discussion. Are these signal or noise?

I would argue that all of the above topics for us VCs are noise. They’re noise because it’s the kind of stuff that we talk about amongst ourselves all the time. It’s overdone. We know what’s REALLY going on. We have an informed point of view. We might differ in opinion but not in information sources and knowledge of the issues.

Examples:

Bin38.
I don’t think any serious VC or angel thought it was “collusion.” Some people were appalled by what they heard was being discussed at the dinner. Other people felt sure there was nothing out of line – just friends talking about topics, catching up on what is the latest or blowing off steam.

Let’s be honest – as professional investors we have ALL been to meetings with other groups of investors where we talk about whether there’s a bubble, price creep, etc. I wasn’t there so I don’t know whether the conversation turned hostile. But knowing so many people who were there I would find it VERY hard to believe that it was anything other than people BS’ing about trends in the market.

Whatever the situation is – it’s now clear that even if they WANTED to collude they couldn’t. They don’t have market power. Just look at what happened with Yuri and Ron funding the YC deals. And look at the valuation creep across the board in the past year.

Here’s the thing: entrepreneurs who aren’t at all of our private meetings really didn’t know what do think about the situation. By having five or six blog posts with different points of view they could draw more inferences. They could chat about it with their peers or mentors. They could start to form an opinion. And I’m delighted that this level of information is out there. It sure wasn’t when I was a first-time entrepreneur. We just got screwed and didn’t know what hit us.

To investors Bin38 was noise, gossip. To entrepreneurs thinking about raising money now or in the future – I think there was a lot of signal.

Convertible Debt & Bubbles
Same thing. Should entrepreneurs have convertible debt or priced equity? If you have convertible debt – should it be capped or uncapped? Should it have a 15 per cent discount at the next round or a 25 per cent discount. This is pure noise to us investors. We discuss this kind of stuff at nauseam among ourselves. So yet another blog post on the topic is cringe-worthy. But to entrepreneurs it can be gold.

Are we in a bubble? I am on the record all over the place saying we are. So are Fred Wilson, Roger Ehrenberg, Mike Maples, and others. Plenty of other people are arguing that we’re not seeing bubbles or that they’re localised. I just had this chat last night with a friend / VC who I respect. He thinks it’s localised.

So if I see a blog post in the topic it’s mostly noise. I can’t imagine that a 24-year-old entrepreneur knows what to think. At least I didn’t have a well-formed opinion at that age. But having lived through three downturns in my working career I have developed a point-of-view. If I share that I think in a blog for some people it would be signal – even if I turn out to be wrong (but I’m not, so don’t worry).

E-mail
And here is where it gets really interesting to me. Brad is a zero inbox kind of guy. I respect that. He’s committed to getting through every e-mail. I will never be that guy. It’s not because I don’t want to respond to all e-mails – I do. I simply cannot. I get way too many e-mails – many of them unsolicited.

Sometimes I get requests from college students asking for help on a report. I get many requests from recent graduates asking if I’d meet for a coffee or be a mentor. Mostly I get company pitches or introductions from friends or people that I know. I get a lot of thank you e-mails for blogging. I get company portfolio requests (review board packs, sign legal docs, help with fund raising, review a new candidates resume, help with press release, request for meeting to discuss topics, etc.)

I read 95 per cent of my e-mail. I don’t respond to it all. A large percentage of my inbound e-mail is what I consider “customer service” and I dedicate as much time as I can to that. I sometimes have seven meetings in one day and an evening event that night. If I have an early-morning meeting the next day then it’s clear that some e-mail is going to get neglected.

Much of my e-mail is signal. But I would argue that a lot of my unsolicited inbound -email is noise. I’m OK with that. I do respond to a lot of random inbound e-mail. Sometimes I miss an important one. This mortifies me. People who know me know to either send it a second time, text me, send me a Tweet or ping my assistant.

“I have had more than a few entrepreneurs complain lately about VCs/angels tweeting/blogging up storms, but ignoring emails.”

I immediately wrote to Paul and said, “crap, I hope that’s not me!” He had sent me a deal where I had to cancel the call twice (once because I was deadly ill with the flu). He assured me it wasn’t but also said humorously, “you’re the sixth VC to e-mail me to check!”

Brad went on to say:

“I know plenty of VCs who are making a ton of ‘content noise’ these days but don’t seem to be able to respond to their signal-related emails. And if entrepreneurs think VC to VC email is somehow special, I’m included in that category (there are plenty of emails I’ve sent to my VC friends with specific stuff in them that are never responded to.)”

I immediately scanned my inbox to look for e-mails from Brad to be sure it wasn’t me who had pissed him off! Based on my e-mail exchange with Paul I’m guessing quite a few VCs did the same. Whew, wasn’t me. I didn’t find any un-responded to e-mails from Brad.

But the honest truth is it could have happened. I try my best and I care about responsiveness but I refuse to be a slave to e-mail. I like customer service but I also need to do sales, marketing, finance, and operations. And I have two kids who I also don’t want to short change.

So some of Brad’s e-mail inbox – which he considers mostly signal – I opt to treat as noise. It’s the only way I can survive. Or at least remain productive and balance all of my priorities. Fred Wilson seems to be more similar to me because he often writes about e-mail bankruptcy, priority inbox, and other topics about how to deal with e-mail. Including today with his post, “How to get your email read.”

Depends on who you are. We investors have well-formed opinions on AL. It’s part of our jobs. We all know Bryce is a great guy. We all know that AngelList is making it easier for some entrepreneurs to raise money. We know that many angels love the service. We probably mostly all feel similar to Brad when he said that he currently doesn’t source deals there so for him it’s a non-issue.

But for the uninitiated entrepreneur I think it’s signal. Should you use AngelList or not? If you decide to, how to you maximise your effectiveness in using the service? Is VC being disrupted by AngelList? Naw. Of course not. But I wrote an entire blog post (and had Nivi & Naval on This Week in VC today) to discuss why I felt that was the case. Others like Jason Calacanis aren’t so sure. By reading 3-4 posts when you have downtime from the daily grind will help inform your POV. It will help you in your lunch time conversations.

So my final word? If blogging is frequent and lots of people pile on it will sometimes sound gossipy or like insider baseball. It will sometimes get heated. Perhaps our audience isn’t always each other (although I read Fred and Brad daily). But to many I would argue it’s signal. And if you put up with all 1,700 words of this I’m hoping you’ll agree.

[p.s. I finished this in less than 40 minutes. Not planning to proof read. Don’t care if it has typos or grammar issues. Just wanted to say that because a friend told me today that a Boston VC commented to him that I spend too much time blogging and he prefers to spend his time investing. Puh-lease. Me? I invest, work deals, and do operations. I also do marketing. Oh, and occasionally I get through all my e-mail ]

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